The special crops industry is losing one of its most experienced and respected trading firms.
In a mutual agreement with its U.S. parent company, Berdex Canada Ltd. has decided to wind up operations by the end of the year.
It will be an orderly exit from the business. The company is not going into bankruptcy or receivership.
“It has nothing to do with financial stress,” said executive vice-president David Newman.
What it has a lot to do with is shrinking margins in the special crops trade.
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“The business has changed significantly. I think there’s less room for these types of services,” said Newman.
Berdex bought and exported special crops from numerous western Canadian processing facilities, which are facing their own challenges.
Yields for special crops over the last three years are down an average of 29 percent from the 2000-01 crop year. Processors are finding creative ways to make up for those lost volumes.
“People are basically just taking the (trade) margin out to keep their plants moving through the lean times,” said Newman.
Marlene Boersch, managing partner of Mercantile Consulting Venture, a Winnipeg agriculture consulting firm, said Berdex’s demise is also a function of misguided competition.
New players in the pulse industry are trying to gain market share by competing on factors like price and payment terms, rather than offering better service or taking advantage of transportation efficiencies. That is driving down special crops margins to unacceptable levels.
“Some of the returns per tonne on special crops are actually lower than what the wheat board pays to grain companies to elevate wheat, which is a much easier thing to do,” she said.
As former vice-president of Berdex, Boersch is familiar with the owners of the company’s U.S. parent company who she described as “very dry business people” who probably felt the scant returns weren’t worth the considerable risks associated with sourcing product from farmers and shipping to third world destinations.
She is sorry to witness the demise of her former employer and thinks farmers should be as well.
“We have lost a number of trading companies and a number of processors and I would say with Berdex, we’re talking about one of the most experienced ones in the bunch.”
Pulse growers will miss the access to a valued lentil and chickpea marketer that had solid relationships with domestic cleaning plants and international buyers.
“Particularly on chickpeas it is very much a shame.”
Chickpeas are a tough crop to market, especially for the “less sexy” sizes and grades. Berdex was one of the first companies to deal with that tricky commodity.
“It’s just some experience gone by the wayside,” said Boersch.
Newman said other traders will be able to absorb the volumes of crop Berdex handled but the intangibles can’t be replaced.
“We were never the biggest, but I always thought we were a very respectable player,” said Newman, who plans to resurface in the special crops industry.
“We’ve always been people that you can count on to trade with versus someone just down the street.”
